Console gamers in Japan were able to breathe a slight sigh
of relief today when it was announced that Sony
would trim the price of the basic 20GB PlayStation 3 console to 49,980 yen
or $430 USD (down from $499 USD). The price cut is a direct response to the
cries from the buying public over the high price of entry for the PS3 in
comparison to its competitors. It was also announced that the base system would get HDMI output.

Even with the price reduction, the base PS3 is still priced
well above its competition. It was announced two weeks ago that Microsoft would
introduce the XBOX 360 Core System for the Japanese market at around $255 USD. Last
Thursday, Nintendo announced a price tag of $212 USD for its Wii
in Japan.

Sony's Ken Kutaragi remarked to reporters that "The
Japanese users and media would not stop saying a price tag of over 60,000 yen,
including tax, was too expensive." One must also remember that Kutaragi
was also quoted as saying back in May that the $499/$599 price points were
"probably too
cheap."

It should be noted that while the price cut affects the 20GB
PS3 model, there is no word on if the price will also fall on the higher spec'd PS3
with its 60GB hard drive, WiFi, and MemoryStick/SD/CompactFlash
reader. There is also no word as to whether this price cut will extend to PS3s
destined for US shores.

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This is plain dumb. The console WAS too expensive and this is a great idea. But the timing is retarded. Regardless of what anyone says about the console, they're going to sell out quantities for this entire year worldwide...probably 1-2 million units. If I were a stockholder (not nearly that stupid), I'd want an extra $80 x 2,000,000. $160 million in lost revenue right there.

According to figures, they plan to launch with only 20% of the shipping machines being low end, with 80% of sales being highend. Since supplies in stores will be limited, that ratio is fixed. Even if consumers now want the cheap one, stocks will run dry, leaving them only the option of getting an expensive one.

Therefore your calculation $80 lost in price reduction times 2m units=$160m is incorrect. They only lose that $80 on the 20% of units that are cheaper. Additionally that 20% is in VOLUME of units and as they are priced different, it is less than the proportionate 20% in revenue.

So for relatively little "loss" they have repositioned the perception of console in the market as more affordable/value.

Also don't forget with the highend one, we may see some BUNDLES of games with it making the games price discounted from the alleged $60.

With other short supply consoles, stores have refused to sell consoles without games, thus they used their stock in "bundle" deals say with 2 or 3 games.

Considering it contains a bluray player and HDMI now, how cheap can you reasonably expect it to be?